Tuesday, October 31, 2017

OVERVIEW OF CMS MOLECULAR PATHOLOGY UTILIZATION IN CY2016

On October 19, 2017, CMS released its CY2016 Part B national utilization files - here.

I've looked at the Molecular Pathology codes, from 81162 to 81599. (For my CY2015 report, see here. For my CY2014 report, see here.)

Total Utilization of MoPath Codes

Culling the codes down to the range 81162-81599, I tally $479,894,633 in "payment allowed", which I use throughout this report. (CMS "payment issued" is slightly less due to deductibles, etc.) This code series has about 168 codes in the CMS CLFS CPT.

In the Genomic Sequencing Procedure Codes, there is a "Valley of Death" with no payments on any of the codes 81410-81425, which are 8 codes including some neonatal codes, exome, and genome.

High Payment Codes

The top ten codes paid $387,452,107. This is 79% of all payments ($387M/$490M). This goes beyond the 80/20 rule; this is the 80/5 rule (5% of all codes get 80% of all payments).

However, some of the unlisted code volume is driven by special MOLDX rules - for example, we noted that Ambry Diagnostics had about 80% use of unlisted codes in CY2015. Ambry primarily provides known gene sequencing, rather than proprietary tests like MAAAs, letting us infer that MolDX rules in California probably drove Ambry's high 81479 number. Over 99% of 2015 81479 payments were in MolDX jurisdictions.

After the unlisted codes at code #1, Cologuard was runner up at #2, with $63M in payments, and Oncotype DX with $61M at #3. The full table is here:

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Note that only 1 CYP gene makes the chart (and barely sequeaks in at $12M), due to stringent LCDs on CYP testing Medicare rolled out over the past 3 years. Two CYP codes, 81225, 81226, garnered a colossal $270M payments back in CY2014.

Top 10 Codes...Other 150 Codes = Long Thin Tail

This pie chart shows ALL Mopath spending $470M), with the first ten slices individually and the last 20% as the last large slice. Note that in this pie chart, and have added the two BRCA coding methods together into one pink slice (81162 & 81211). After the initial light blue slice, Unlisted Code 81479 (about 99% found in MolDX states), the "fall colors" are all MAAA tests. (Much of the light blue slice is also MAAA tests under unlisted code, e.g. Genesight etc. A best-guess would be that the circle from about 1:30 to about 8:00 is all MAAA tests).

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High Service Volume Codes

The top 10 codes by unit volume had 511K services, or 61% of the total 838K services. These top ten most heavily utilized tests had $256M in payments, or 52% of payments.

The most frequent test was Cologuard, at 123,768 services. (339 Medicare patients per day sent their little package to Wisconsin.) The second most frequent was Unlisted Code 81479, with 73,573 services, followed by Tier 2 code 81401 at 58,478 services.

The full table is here:

click to enlarge

Tier 2 Codes

CPT's quirky Tier 2 codes tallied $19,936,026 in payments, or just 4% of CMS payments. Tier 1 81400 had 31K uses while Tier 2 81401 had 58K uses. In total there were 125,000 uses of Tier 2 codes, but only a couple hundred for the two highest levels. "Ave Pmt" is observed average 2016 payment; while "Pmt" is the predicted 2018 PAMA payment. The full Tier 2 table is here:

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The Tier 2 codes were contractor priced until now, but will have PAMA prices in CY2018. The PAMA prices generally don't diverge too much from the average MAC prices under the local pricing system. MOLDX has elaborate prices for different tests within each Tier 2 level. These may be replaced (sunsetted) by one-size-fits-all pricing when the Tier 2 CLFS prices become law on 1/1/2018.

Tumor Panel Codes Perk Up A Little

Tumor panel codes had virtually no usage in 2015 in CMS data, but pick up a bit in 2016. There were 3,585 uses of 81445, 3,366 uses of 81450, and 1,062 uses of 81455. These are respectively codes for 5-50 somatic tumor genes, 5-50 hematopoietic tumor genes, and >51 tumor genes of any type.

MAAA Tests

The MAAA code series 81490-81595 tallied $215M, or about about 45% of all mopath spending.

Medicare BRCA Data Diverges from Private Payer (PAMA) BRCA Data

A few weeks ago, CMS released its 5M line database of private payer lab test price data for 1Y2016, collected as part of the new PAMA price setting process. For BRCA testing, which has a very complex coding system, at least in 1H2016, private payer use of CPT Code 81162, a comprehensive BRCA testing code, was almost nil (about 1000 cases out of 200,000 cases).

However, CMS data is more diverse. There were 16,665 cases of 81162, for $41M in payments. It's used for more than half of CMS CY2016 payments, while it was closer to 1% of private payer CY2016 payments. This could be because private payers had based contracting running across 2015 and 2016 on existing codes (e.g. 81211) whereas CMS has no long term contracts, and correct coding rolls over and kicks in anew with each January 1st.

But quite a few other labs and MACs were still very actively using an unbundling or code stacking approach under Medicare, billing about 9,000-10,000 cases of 81211 (BRCA sequencing) and also 81213 (BRCA uncommon dup del). In CY2016, the difference between coding 81162 (about $2500) and 81211+81213 (about $2700) was small. However, the target prices for these codes widen under PAMA (to $1600 vs $2900 (!!)), making the choice of coding in the future more impactful.

There is also a hereditary breast cancer panel codeset: 81432, $932, for 14 or more BRCA related genes, and 81433, $600, for the Dup Del analysis. CMS paid for 4,336 cases of 81432, but only 900 cases of 81433. This is likely because of a MOLDX edit that classifies 81433 as an "excluded" code.* This issue becomes more important as PAMA takes hold, because the price of 81432 will drop at 10% a year in the next three years. Of course, it also makes no logical sense that BRCA1+BRCA2 analysis pay $2900 while that full service fits inside of a panel that pays in total $900 or less. Two eggs for $20, a dozen eggs for $2. You can't explain that to your sixth grader.

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MolDX document M0047 V15. MOLDX classifies 81433 (breast cancer panel dup del) as an "excluded gene" but does NOT classify the parallel code 81213 (breast cancer gene dup del) as an excluded gene. Data shows that this drives payment to California labs doing BRCA testing to about $900 whereas in some other states Medicare pays about $2500-2700 for BRCA testing. CMS has created a webpage for CY2016 State-Level payment data, but the files are not active yet. CMS will eventually post provider-level data by CPT code for CY2016, but not until about June 2018.

In short, we're really seeing four ways to price BRCA testing at CMS: 81213+81211 (most costly); 81262, which CMS seems to use more than privates; 81432+81433; and 81432 alone (where 81433 is banned-by-MolDX). This results in BRCA pricing, in real 2016 data, from around $900 to $2700 or 3X.

About the Author

Bruce Quinn MD PhD is an expert on health reform, innovation, and Medicare policy. He helps both large and small companies understand and overcome hurdles to commercialization, as well as craft business strategies for a changing environment. CONTACT Dr. Quinn through www.brucequinn.com. BACKGROUND: Dr. Quinn has worked in academic medicine, Accenture business strategies, and for the Medicare program. EDUCATION: Stanford MD/PhD, MIT Postdoc, Kellogg MBA.